Lawyers are used to selling services. For the past year-and-a-half, we have been selling a product. That product is an exhaustively researched and continuously updated 50-state survey of Hemp CBD rules and regulations. The survey is broken down by category: ingestible, smokable and cosmetic CBD products. Before we get too far into how that works and what it costs, it’s worth explaining how we got here.

Toward the end of 2018, we signed a pair of well known, national retail clients. In-house lawyers for these clients called us in anticipation of hemp legalization under the 2018 Farm Bill. At that time, it seemed certain that hemp would be legalized federally, and businesspeople in these giant chains already had forged ahead with sourcing Hemp CBD products. The lawyers were concerned about the legality of these products under both federal and state laws.

Although the 2018 Farm Bill changed nothing with respect to Food and Drug Administration (“FDA”) authority to regulate hemp products, many retailers were already selling Hemp CBD products in late 2018. Our advice on what the new federal laws allowed was straightforward; however, the state-by-state analysis was dynamic to say the least. States took wildly different approaches and those approaches were changing rapidly (and still are, in many cases).

To deal with this framework, we compiled expansive, 50-state surveys to show each state’s position on the sale of Hemp CBD in three product categories:

States have adopted distinct and evolving approaches to regulate these products, often inconsistent with FDA positions. For example:

Some states allow the manufacture and sale of all Hemp CBD products, including foods, dietary supplements, smokable products, and cosmetics.

Other states strictly prohibit the production and/or sale of any such products unless Hemp CBD is used for “medical treatment.”

A number of states ban Hemp CBD foods and dietary supplements but seem to take no issue with the sale of other nonfood or non-beverage products (such as Hemp CBD cosmetics).

A handful of states allow the sale and marketing of Hemp CBD foods and dietary supplements but strictly prohibit the sale or restrict the processing and manufacturing of Hemp CBD smokables within their borders.

In addition, some of the states that legalized the sale of Hemp CBD products have their own set of regulations, including but not limited to:

registration and/or permitting requirements

labeling rules

testing requirements

This patchwork of state-by-state regulations forces manufacturers and distributors of Hemp CBD products to follow a variety of regulations in each state where products are sold and to limit sales to jurisdictions in which products are deemed lawful– all against the backdrop of FDA law.

To assist our clients with this daunting task, each month we have five or six Hemp CBD attorneys track all 50 state laws and regulations pertaining to the sale and marketing of these products. The attorneys then summarize the current status in a “CBD Risk Matrix,” which provides an overview of each state’s position on the sale of Hemp CBD ingestible, smokable products and cosmetic products.

To be sure, this is a tremendous amount of work. However, we have been able to knock the fees down by achieving economies of scale over the past 18 months and selling the CBD Risk Matrix to numerous manufacturers, distributors and retailers of Hemp CBD products.

What does it cost?

We charge a flat fee of $3,500 per month for the full CBD Risk Matrix

We charge a reduced flat fee of $3,000 per month for the purchase of five consecutive months’ CBD Risk Matrices

We charge a flat fee of $1,500 per month for any version of the CBD Risk Matrix that is limited to a single product category (ingestible, smokable, or cosmetic products)

The CBD Risk Matrix really is a “moment and time” thing. While some states have taken clear and consistent regulatory steps on Hemp CBD products, others continue to roll out regulations and guidance through public health authorities or other branches of government. We see multiple changes in any given month, sometimes with little notice or fanfare.

If you would are interested in ordering a CBD Risk Matrix, email us at firm@harrisbricken.com. We will keep this product on offer as long as it makes sense to do so.

A U.S. hemp standards group has added a former state attorney general and a former FDA official to the organization’s board. The appointments of former Arkansas attorney general Dustin McDaniel and Larisa Pavlick were announced Thursday by the U.S. Hemp Authority Board, a self-regulating organization. Pavlick currently serves as vice president of Global Quality and […]

The City of Los Angeles is no stranger to change and struggle around its local cannabis industry. Since the passage of Proposition M back in 2017, the City has made great strides but also suffered significant setbacks in building its licensed cannabis marketplace. Even through the COVID-19 pandemic, this trend continues for Los Angeles and its Department of Cannabis Regulation (“DCR”),

We’ve written a lot over the past three years about L.A.’s journey with licensed cannabis after the passage of Prop. 64 and the Medicinal and Adult-Use Cannabis Regulation and Safety Act (see here for a significant series of posts dedicated to the City of L.A). A very brief summation is that the DCR developed licensing regulations, with the approval of City Council, that ended up producing three phases of licensing:

Phase 2 was only for those non-retail cannabis operators that could prove certain criteria to the DCR for licensure.

Phase 3 was split into two rounds of retail licensing as well as a general public round. The first round was dedicated to only licensing retail applicants on a lottery basis that qualified as Type 1 or 2 social equity candidates pursuant to the City’s social equity program.

Today, we’re waiting on phase 3, round 2 to commence, and the City is only accepting retail license applications under Public Convenience Notices for those areas in the City that are already at capacity because of Undue Concentration.

Unless you haven’t been paying attention, you know that round 1 of phase 3 underwent an audit by the City to ensure fairness and legitimacy across the board for Phase 1 applicants. After the first round was over, L.A. City Council member Herb Wesson alleged in a letter to DCR that:

Over the last couple of weeks, including at the Cannabis Regulation Commission meeting last Thursday, allegations have been made that multiple applicants had access to the application portal prior to the announced start time of 10 am on Tuesday September 3rd. Unfortunately these allegations have been substantiated by the Department at the Commission meeting and the Phase 3 Retail Round 1 process was compromised. While it was always understood that not every applicant would get a license, it is paramount that the application process have the utmost integrity, be transparent, and fair. There appears to be no scenario in which the Retail Round 1 process can meet those three principles currently.

Wesson’s letter went on to state:

I am recommending that the Department: 1) suspend all Retail Round 1 applications; 2) refund all monies paid by Retail Round 1 applicants and cancel all invoices; and 3) prepare a full audit and report by an independent third party not involved in the process – unless there are other options like processing every application that would provide the necessary assurances that the process was not compromised. These are the only options that will provide the clarity and time we need to ensure that the Phase 3 Retail process is fair, transparent, and has integrity.

In the wake of Wesson’s letter and other complaints, the external audit was conducted and it concluded in a report, issued in late March 2020, which states that:

The Auditor found that errors in the DCR process allowed certain applicants early access to the application system. The DCR then created a “normalization process” to level the playing field and eliminate any advantage given to these early applicants. The Auditor determined that the DCR’s “normalization process” was a reasonable way to address the errors and specifically was NOT making a recommendation that DCR use a different “normalization process.” Finally, the Auditor found that that the DCR conducted the Phase III Round 1 licensing process in good faith, and that there was no evidence of bias or unfairness.

On last count, the City was proceeding with continuing to process the first 100 phase 3, round 1 applicants. Out of the audit came comprehensive recommendations from the DCR to overhaul the City’s entire social equity program going forward. See here for those recommendations.

If these recommendations are adopted by the City Council and made law, we will see major changes to the City’s social equity eligibility criteria including commencing with round 2 of phase 3 licensing. These changes include, but will not be limited to:

mandating that all social equity eligible applicants own at least 51% of their subject companies; and

eliminating the concept of “Disproportionately Impacted Area” and replacing it with proof of residency for ten years (cumulatively) in certain Police Reporting Districts.

These recommendations went to Council in early April and the coronavirus has put on hold any progress regarding these proposed changes. I can only imagine there will be mixed reactions from stakeholders on these proposed changes and lots of discussion once Council gets back to business.

In the interim, on April 21, 2020, the Governor’s Office of Business and Economic Development announced that DCR was awarded over $6 million n grant funding from the California Cannabis Equity Grant Program for local governments with qualifying social equity programs pursuant to the California Cannabis Equity Act of 2018. According to DCR:

[t]he City of Los Angeles will be utilizing this funding to provide verified Social Equity Program Applicants various resources including Workforce Development and Business Development Services as well as a loan/and or grant program.

A specific report with how these funds will be allocated will be released in early July of this year. The DCR also pushed back the deadlines for paying fees around Temporary Approval and pre-licensing inspections to secure Temporary Approval for Phase 1 and 2 applicants to June 30 and July 3, respectively and accordingly.

The audit of the City’s phase 3, round 1 licensing program was a hiccup in the City’s progress on licensing but it’s helped to birth serious considerations around reforming the City’s social equity program. All of that will breed and continue to breed delay in getting people licensed under Proposition M. At the same time, the DCR is clearly trying to work with applicants in a positive way to account for COVID-19 collateral damage in giving those with, or those seeking, Temporary Approval more time to pay their required fees and to undertake their mandatory facilities inspections.

As the City continues to go forward and backward on licensing, other cannabis oddities in L.A. rage on. Recently, there was a massive explosion in downtown L.A. (at Smoke Tokes in Little Tokyo) that involved the fiery explosion of a wholesaler’s stock of butane and other volatile materials used to manufacture cannabis products. Note that this is not necessarily a business that requires licensing by the California Department of Public Health or DCR because, allegedly, this company is just a wholesale supplier to those who make cannabis products with volatile solvents. (The manufacture of solvents requires a Type 7 cannabis license; investigation is still ongoing into whether Smoke Tokes was illegally making hash oil or not). The Feds are looking into this terrible fire that took a serious toll on the L.A. Fire Department. The city. itself promises that it will try to locate other businesses like Smoke Tokes to ensure that they’re following health and safety regulations around the storage of volatile chemicals and solvents.

We’ll continue to update readers as L.A. moves along in its licensing regime, for better or worse. Stay tuned.

The Agriculture Improvement Act of 2018 (2018 Farm Bill) legalized hemp by removing the crop and its derivatives from the definition of marijuana under the Controlled Substances Act (CSA) and by providing a detailed framework for the cultivation of hemp. The 2018 Farm Bill gives the US Department of Agriculture (USDA) regulatory authority over hemp cultivation at the federal level. In turn, states have the option to maintain primary regulatory authority over the crop cultivated within their borders by submitting a plan to the USDA.

This federal and state interplay has resulted in many legislative and regulatory changes at the state level. Indeed, most states have introduced (and adopted) bills that would authorize the commercial production of hemp within their borders. A smaller but growing number of states also regulate the sale of products derived from hemp. Our attorneys track these developments in real-time on behalf of multiple clients, and we provide those clients with a 50-state matrix showing how states regulate hemp and hemp products.

In light of the rapidly evolving legislative changes, we are also presenting a 50-state series analyzing how each jurisdiction treats hemp-derived cannabidiol (Hemp CBD). Today we turn to Virginia.

Earlier this year, the Virginia Department of Agriculture and Consumer Services (VDACS) submitted its plan to regulate hemp production to the USDA for review and approval. Shortly thereafter, the USDA requested that VDACS revise and resubmit its plan, which is now under second review. According to the VDACS hemp webpage, the state agency expects its plan will go into effect on October 31, 2020. This means that until then, the VDACS will continue to operate under the 2014 Farm Bill.

Virginia’s hemp rules mandate that hemp growers, handlers and processors wishing to engage in the production of hemp secure a registration from the VDACS.

Virginia is also one of the states that expressly regulate the production of hemp products intended for human consumption.

On July 15, 2019, the VDACS Commissioner announced it would treat hemp-derived extracts intended for human consumption, such as a Hemp CBD oil, as approved food additives. Yet, neither Virginia law nor the VDACS rules overtly addressed the sale and marketing of these products. Then, in April, the governor signed into law SB 918, which helped clarify this issue. The new law, which went into effect upon its passage, provides that hemp extract that contains no more than 0.3 percent THC shall be treated as a food. A food is defined as:

any article that is intended for human consumption and introduction into commerce, whether the article is simple, mixed, or compound, and all substances or ingredients used in the preparation thereof. ‘Food’ does not mean drug as defined in § 54.1-3401.” (Emphasis added)

Therefore, the sale of these products is now expressly allowed, provided they meet “specific laws, regulations, or criteria that pertain to the manufacturer of industrial hemp extracts or food containing an industrial hemp extract in the location in which such manufacturing occurs.” It is unclear whether this law applies to both in-state and out-of-state hemp extracts or food, but this issue will likely be clarified by the VDACS, which is tasked with adopting labeling and testing requirements for these products.

Although the manufacture of cosmetics infused with Hemp CBD is allowed, their sale is not expressly addressed under Virginia law. This is likely due to the fact that the VDACS does not have jurisdiction over this category of products. Nevertheless, because cosmetics can be lawfully manufactured in the state, it seems reasonable to infer that the sale of these products is allowed so long as they contain no more than 0.3 percent THC and are safe for human consumption.

On March 23, the governor signed into law HB 962, which clarifies that the sale of Hemp CBD smokable products is lawful, provided certain packaging requirements are met and the products are not sold to any person under 21 years of age. This new law will go into effect on July 1.

We’ll continue to monitor all things hemp in Virginia and elsewhere. For previous coverage in this series, check out the links below:

Introduction When it comes to finding the best CBD products in Minnesota, you will find that there are a lot of different ways to do so. This article will explain exactly what you can expect when you are shopping for CBD products in Minnesota. This information should help you make the right choice, and you […]

You have questions. We have answers.

Harris Bricken’s California attorneys regularly advise cannabis and hemp businesses and entrepreneurs on nearly all aspects of California’s licensed and highly regulated cannabis, hemp, and CBD industries. We understand how complicated these industries can be and to that end, our California cannabis business attorneys will lead a live FREE Q & A session via webinar on Thursday, May 28th from 12pm to 1pm PST.

During the Q & A panel, our California cannabis attorneys will field questions on all aspects of the licensed cannabis industry in California, as well as hemp, CBD and the effects of COVID-19 on each industry. The panel will consist of attorneys Griffen Thorne (Los Angeles) and Alison Malsbury (San Francisco) and will be moderated by Hilary Bricken (Los Angeles).

This Q & A presentation is free to attend and we encourage all attendees to submit questions in advance while registering. The attorneys will answer as many as possible during the lunch hour.